Welcome to Cubic s 2018 Annual Shareholder Meeting

Transcription

1 Welcome to Cubic s 2018 Annual Shareholder Meeting

2 Safe Harbor & Disclosures 2 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the safe harbor created by those sections. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or our future financial and/or operating performance are not historical and may be forwardlooking. These statements are often, but not always, made through the use of words or phrases such as may, will, anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, predict, potential, opportunity and similar words or phrases or the negatives of these words or phrases. These statements involve estimates, assumptions and uncertainties, including those discussed in Risk Factors in the Company s annual report on Form 10-K for the year ended September 30, 2017, and throughout this presentation that could cause actual results to differ materially from those expressed in these statements. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate results or future period trends. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements This presentation also includes non-gaap financial measures as that term is defined in Regulation G. Non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures can be found in the Appendix to this presentation.

3 Cubic Corporation Overview 3 3 NYSE: CUB Transportation Systems Mission Solutions Defense Training Public since 1959 Market cap $1.6B 8,700 employees working in 24 countries Prime contractor on ~90% of revenue Leading integrator of payment systems and intelligent travel solutions Consolidated FY2017 sales of $1.5B Business Segments Transportation Systems 39% Defense Systems 36% Defense Services 25% Leading provider of expeditionary communications solutions Leading provider of defense training systems and services Customer Locations United States 58% United Kingdom 15% Australia 12% Far East/Middle East 9% Other 6% 2017 backlog: $3.1B Products and Services Services 54% Products 46% Contract Types Fixed Price 83% Other 17% Global provider of systems and solutions that meet the most demanding requirements for the transportation and defense markets

4 Our Common Mission and Technologies Cubic is a market-leading, technology provider of integrated solutions that increase situational understanding for transportation, defense C4ISR and training customers worldwide to decrease urban congestion and improve the militaries effectiveness and operational readiness. 4 Cyber Management Instrumentation Secure Network Communications Cloud Computing Algorithms / Simulation Data Visualization Power Management

5 Shareholder Return 5 $200 $150 S&P % Cubic +38% Russell % $100 $50 Cubic Corporation S&P 500 Index Russell 2000 Index $0 7/1/2014 9/30/2014 9/30/2015 9/30/2016 9/30/ /31/2017 2/15/2018 Total shareholder return reflects the stock performance since Brad Feldmann became CEO of Cubic Corporation. The chart assumes that $100 was invested on July 1, 2014 and compares cumulative shareholder return on investment as of February 15, The return on investment represents the change in the stock price plus reinvested dividend.

6 Our Strategy 6

7 Innovations and Investments Transportation C4ISR Aerial Layer Network Next-generation communications Product-centric transformation Advanced mobile Open payment Cloud-based solutions ISR as a service NextBus 2.0 realtime passenger information systems 7 Expeditionary communications 7 Defense One Cubic Next-generation training solutions High-fidelity distributed training solutions Live, Virtual, Constructive and Gaming (LVC-G) training Implementing common Enterprise Resource Planning system Includes contracts, financial, manufacturing, supply chain and engineering

8 Recent Wins Demonstrate Investment Payoff 8 Cements position as market leader Confirms One Account strategy Validates R&D investments and demonstrates potential for long-term returns Delivers cost savings and efficiencies to our customers New York ($554m) Boston ($575m) GATR: T2C2 full rate production decision Next-generation expeditionary, Tri-Band satellite communication solutions Significant SWaP / bandwidth advantage Initial procurement 800+ systems Award to continue support of US Army s JRTC ($325m) Follows $50m+ in recent awards: Asia-Pacific Combat Training Center award ($26m) and LCS Immersive Virtual Shipboard Environment orders ($29m) Strong international pipeline T2C2 = Transportable Tactical Command Communications. LCS = Littoral Combat Ship. JRTC = Joint Readiness Training Center. SWaP = size weight and power.

9 Acquisition Strategy Transportation Mission Solutions Defense Systems Serco + Traffic management systems for monitoring and control of urban road networks in Europe 2013 Nextbus + Real-time passenger information 2017 Vocality International + Optimizes communication paths and consolidates DTECH supply chain 2016 GATR Technologies + Inflatable and ultra-portable satellite communications antenna 2015 TeraLogics + Full Motion Video for the Defense Department, intelligence community and commercial customers 2014 DTECH Labs + Ruggedized modular networking and baseband communications equipment 2017 Deltenna Limited + Wireless tactical communications infrastructure including radio and antenna solutions 2014 Intific + Software and game-based solutions in modeling and simulation, training and education, cyber warfare and neuroscience Our growth strategy is focused on acquisitions related to NextCity TM, C4ISR and NextTraining TM

10 Our Markets Market-leading positions in Urban Revenue Management, niche C4ISR and Live, Virtual and Constructive (LVC) training Transportation C4ISR Training Market Size $12.0B $2.4B $16.3B 5-year CAGR ~5.0% ~10.0% 2.6% Market Drivers Urbanization; Convenience; Reducing collection cost; Predictive, personalized and actionable traveler Low SWaP, complex threat and insatiable appetite for Full Motion Video(FMV) Complex threat and budget pressures 70% urban revenue management market share by ridership in North America, UK and Australia Established leadership in high growth, high margin expeditionary communications Significant market share in air combat and ground live training

11 Goal 2020 Revenue and Profitability Objectives Revenue 1) ($M) Expected Growth Rate 2020 Revenue 2) ($M) 2020 Adj. EBITDA Margin Transportation $ % $800 - $ % Defense Systems Training Systems Mission Solutions $484 Training Systems % Mission Solutions % $650 - $ % Defense Services $ % $450 - $ % Consolidated $1, % $1,900 - $2,100 10%+ 1) 2016 base year for comparison. 2) Includes acquisitions.

12 Summary Market leading and technology driven company serving attractive core markets 12 Culture of customer-focused innovation, delivering next-generation solutions Strategic and financial priorities aligned with high growth, higher margin businesses Scalable infrastructure supports organic and inorganic growth Positioned for growth and profitability improvements in FY2018 and beyond Strong start to FY2018 with major transportation wins in New York and Boston, defense training JRTC, and T2C2 FRP decision Strongly positioned to achieve Goal 2020 and deliver superior returns for our shareholders

13 Appendix

14 Our Markets Transportation Market leading positions in Urban Revenue Management, niche C4ISR and Live, Virtual and Constructive (LVC) training Urban Revenue Management Rail Ticketing Tolling NextBus Surface Transport Management Enhanced Analytics Parking Shared Transport Market Size $4.2B $1.4B $2.3B $783M $1.8B $201M $765M $203M 5-year CAGR 4.0% 4.0% 6.7% 4.0% 4.9% 20.0% 2.0% 20.0% C4ISR C2 Systems Secure Communications Secure Networks Market Size $500M $1.5B $431M 5-year CAGR 13.4% 7.7% 10.0% Training Air Combat Ground Training Training & Exercises Virtual & Game-Based Learning National Intelligence Live Fire / CRDS Market Size $611M $1.1B $4.0B $8.2B $2.0B $489M 5-year CAGR 3.2% 2.6% 2.6% 2.8% 1.0% 2.7%

15 GAAP to Non-GAAP Reconciliation Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA Twelve Months Ended September 30, In Millions Consolidated CTS CGD Systems CGD Services Twelve Months Ended Sep 30, 2017 Net income (loss) attributable to Cubic $ (11.2) Provision for income taxes 15.1 Interest expense (income), net 14.0 (1.4) $ 0.2 $ - Other non-operating (expense) income, net (0.4) 1.0 $ 0.7 $ - Operating Income (loss) $ 17.5 $ 39.8 $ 18.8 $ 6.7 Depreciation and amortization Other non-operating expense (income), net 0.4 (1.0) (0.7) - EBITDA $ 69.0 $ 47.6 $ 52.3 $ 9.7 Acquisition related expenses, excluding amortization 1 (0.3) (0.2) (0.1) - ERP/Supply Chain Initiatives Restructuring costs Gain/Loss on sale of fixed assets 0.4 Other non-operating (expense) income, net (0.4) Adjusted EBITDA $ $ 48.8 $ 53.8 $ 9.9 EBITDA Margin 4.6% 8.2% 9.9% 2.6% Adjusted EBITDA Margin 7.1% 8.4% 10.2% 2.6% 1 Includes transaction costs, retention bonuses and earn out liability changes related to acquired businesses.

16 GAAP to Non-GAAP Reconciliation Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA Twelve Months Ended September 30, In Millions Consolidated CTS CGD Systems CGD Services Twelve Months Ended Sep 30, 2016 Net income (loss) attributable to Cubic $ 1.7 Provision for income taxes (9.2) Interest expense (income), net 9.7 (1.2) - (0.1) Other non-operating (expense) income, net Operating Income (loss) $ 7.2 $ 57.5 $ (17.1) $ 11.2 Depreciation and amortization Other non-operating expense (income), net (5.0) (0.4) (0.6) - EBITDA $ 47.7 $ 65.4 $ 11.0 $ 16.4 Acquisition related expenses, excluding amortization ERP/Supply Chain Initiatives Restructuring costs Other non-operating (expense) income, net Adjusted EBITDA $ $ 67.7 $ 39.7 $ 16.9 EBITDA Margin 3.3% 11.2% 2.3% 4.2% Adjusted EBITDA Margin 8.1% 11.5% 8.2% 4.3% 1 Includes transaction costs, retention bonuses and earn out liability changes related to acquired businesses.

17 GAAP to Non-GAAP Reconciliation Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA Quarter Ended September 30, In Millions Consolidated CTS CGD Systems CGD Services Three Months Ended Sep 30, 2017 Net income (loss) attributable to Cubic $ 13.2 Provision for income taxes 9.3 Interest expense (income), net 2.6 (0.3) Other non-operating (expense) income, net (0.5) - Operating Income (loss) $ 25.4 $ 23.2 $ 15.0 $ 1.9 Depreciation and amortization Other non-operating expense (income), net (0.3) (5.3) EBITDA $ 38.0 $ 19.9 $ 24.2 $ 2.5 Acquisition related expenses, excluding amortization ERP/Supply Chain Initiatives Restructuring costs (0.3) (0.1) Other non-operating (expense) income, net (0.5) - Adjusted EBITDA $ 50.2 $ 25.2 $ 24.0 $ 2.4 EBITDA Margin 8.5% 11.7% 13.6% 2.6% Adjusted EBITDA Margin 11.3% 14.8% 13.5% 2.5% 1 Includes transaction costs, retention bonuses and earn out liability changes related to acquired businesses.

18 GAAP to Non-GAAP Reconciliation Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA Quarter Ended September 30, In Millions Consolidated CTS CGD-Systems CGD-Services Three Months Ended Sep 30, 2016 Net income (loss) attributable to Cubic $ (7.5) Provision for income taxes 11.1 Interest expense (income), net 3.4 (0.3) - (0.1) Other non-operating (expense) income, net 3.5 (0.1) Operating Income (loss) $ 10.5 $ 13.6 $ 6.6 $ 1.9 Depreciation and amortization Other non-operating expense (income), net (3.5) 0.1 (0.6) - EBITDA $ 20.6 $ 16.5 $ 15.0 $ 2.3 Acquisition related expenses, excluding amortization ERP/Supply Chain Initiatives Restructuring costs Other non-operating (expense) income, net 3.5 (0.1) Adjusted EBITDA $ 35.7 $ 16.7 $ 16.6 $ 2.3 EBITDA Margin 5.1% 10.6% 9.8% 2.4% Adjusted EBITDA Margin 8.8% 10.7% 10.8% 2.4% 1 Includes transaction costs, retention bonuses and earn out liability changes related to acquired businesses.